Maybe someone can explain this to me
why the following assumption wouldn't hold true. If the housing boom drove the economy up for the last few years, why wouldn't the housing bust drive it down? Is there something better with the US economy now than there was in early 2003? I mean, are consumers in better shape now than they were then? I understand that the average persons house is still worth more, but so many that have houses borrowed against them and now have credit card bills and home equity loans to pay off that they didn't have before. This isn't even getting into the subprime mess and now the alt A mess starting.
I am just trying to understand how the average consumer would now be in a position to spend as much more more now than from 2003-2006. I mean consumer spending represents a huge chuck(I've heard 70%+) of the health of the economy- doesn't it? It seems that in order to rationally say the stock market should continue to rally, we would also have to say that the economy will keep growing at at least the same pace or greater as it has been. I mean, isn't it like a stock that's still growing, but growth has slowed, and looks to slow further going forward. I personally would sell that stock as soon as I saw that trend. Why is it different here? In other words, why would one want to be in a stock market driven by economic growth, when economic growth turns and starts to slow- especially when there is no end in sight to where growth will turn positive again? Wade
AI
